Grupo Unicaja Banco posts in the nine months to September 2022 a net profit of €260 million, up 67.1% compared to the same period of 2021. The Group’s results stand on the increase in ordinary income, with a growth in net fees (11% y-o-y), the decrease in operating expenses (down 8.5% y-o-w), following the materialization of the synergies arising from the restructuring plans, and on the decrease in the needs for loan loss provision (39.9% y-o-y reduction). The gross margin grew by 3.3%; and the pre-provision profit, by 20.5%.
Performing loans to individuals increased by 2% y-o-y, reaching €34,393 million, and mortgage-backed lending grew by 1.9% up to €31,574 million. Total performing loans grew by 0.5% up to €53,343 million. In 9M2022, €7,766 million where granted in new loans and credits, €3,225 million in retail mortgages.
The positive evolution of results has been accompanied by a low cost of risk, thanks to the portfolio’s risk profile and high coverage levels, as well as by sound solvency levels. Non-performing Assets (NPAs) continued to decrease, with an 8.3% y-o-y drop due to the reduction in the stock of foreclosed assets, with gross outflows of €393 million in the year (-1.8% y-o-y).
Giving continuity to the traditional prudent approach followed by Unicaja Banco, the NPAs reduction is accompanied by the maintenance of high coverage levels: the NPA coverage rate reached 64.1%, NPL coverage stood at 64.7%, whereas the coverage of foreclosed assets stood at 63.4%. NPL rate remained stable at 3.5% and the cost of risk stood at 29 bps, compared to 41 bps in September 2021.
Unicaja Banco maintains a strong solvency position, with a CET 1 fully loaded ratio standing at 13.0% and a capital excess over regulatory requirements of €1,635 million.
Balance sheet
Performing loans to individuals grew by 2%
In a macroeconomic context that is not very favourable for savings, due to high uncertainty and inflation levels, and high volatility in the financial markets, customer funds reached €101,106 million, following a 3.6% reduction compared to the same period last year. Demand deposits increased by 1.2% to €57,652 million. 89% of customer funds are retail customer funds.
In off-balance sheet funds, savings insurance grew in 3Q by €97 million, up 2.3%, reaching a balance of €4,270 million. Mutual funds reached €11,205 million.
Lending has been boosted mainly by the increase in performing loans to individuals (2% y-o-y), both in mortgages (1.9% y-o-y) and consumer loans (3.3% y-o-y), as well as by the increase in loans to public administrations (1.2% y-o-y). The performing loan book grew by 0.5% y-o-y, up to €53,343 million. New lending reached €7,766 million, of which €3,225 million correspond to mortgages to individuals (41.5% of the total). New mortgage lending represents a domestic market share of 7.4% (average in the last twelve months), almost twice Unicaja Banco’s natural share in the Spanish banking sector. The portfolio of corporate loans has decreased by 3.5% y-o-y, down to €12,966 million, due largely to the extraordinary growth in financing in 2021 as a result of the ICO-guaranteed lines.
Unicaja Banco’s performing loan book remains highly diversified: 59.2% corresponds to retail mortgage financing, 24.3% to corporate loans, 11.2% to public administrations and 5.3% to consumer and other purposes.
Low cost of risk and high coverage
Unicaja Banco maintains its strategy of maximum solvency and prudent risk management. At the end of 3Q22, the NPL ratio stands at 3.5%. Sales of foreclosed assets recorded a good performance, as reflected in gross outflows of foreclosed assets in the year, amounting to €393 million, with a 18.8% y-o-y reduction in the stock of gross foreclosed assets.
All of the above results in an ongoing reduction of NPAs, which fall by 8.3% y-o-y, (€347 million). The net NPA ratio stood at 2.5%.
At the same time, Unicaja Banco has maintained its high coverage ratios, giving continuity to its traditional prudent approach, both for NPL and for foreclosed assets, reaching a 64.7% NPL coverage ratio, and a 63.4% foreclosed assets coverage ratio. The total NPA coverage (NPL and foreclosed assets) reached 64.1%.
P&L account
Increase of the net income
Unicaja Banco posts in 9M22 a consolidated net profit of €260 million, 67.1% higher than the same period one year earlier.
The net interest income reached €765 million. In the quarter, it recorded an increase of €12 million compared to 3Q21, favoured by the growth of financial income due to the rise in interest rates, which will be more clearly reflected in the fourth quarter of the year. On a year-on-year basis, net interest income was 3.6% below the figure recorded in 2021, mainly due to a lower contribution from the wholesale business, although reflecting a trend of recovery and improvement compared to the 7.6% decline recorded in the first half of this year. Customer spread remained at 1.4%.
The net fee income posts a significant increase, reaching €394 million, up 11% y-o-y. This growth has been boosted by the activities in mutual funds and cards mainly. The gross income reached €1,244 million, 3.3% higher than in the same period one year earlier. The net interest income of retail business and fees represent 78% of the gross margin. The improvement in the P&L account has also been based on cost reductions, which reflect the synergies resulting from the implementation of the restructuring plans (72% of the planned staff exits and 100% of the planned close of branches have already materialized). Operating expenses were down 8.5% year-on-year to €586 million.
Thus, pre-provision profit increased by 20.5% y-o-y, standing at €590 million. Loan loss provisions fell by 39.9% y-o-y to €129 million, and therefore the cost of risk stood at 29 bps compared with 41 bps in the same period of 2021. Operating income stood at €378 million, 79.9% higher than in the same period of the previous year.
Consolidated profit before tax was €357 million, and net profit amounted to €260 million, with year-on-year increases of 74.7% and 67.1%, respectively. All of the above has led to an increase in profitability (ROTE) at the end of the quarter up to 5.5%, compared with 3.4% in the same period last year.
Solvency and liquidity
CET 1 fully loaded ratio of 13.0% and strong liquidity position
After the merger, Unicaja Banco maintains strong solvency levels[1]. As at the end of 3Q22, it had a CET 1 phase in ratio of 13.6%, a Tier 1 capital ratio of 15.2% and a Total Capital ratio of 17.1%, well above the ratios required to the Bank of 5.4 p.p. in CET 1 and 4.4 p.p. in Total Capital.
In fully loaded terms, the bank had a CET 1 ratio of 13.0%, with €1,635 million in excess of regulatory requirements, a Tier 1 capital ratio of 14.6%, and Total Capital of 16.4%. CET 1 fully loaded increases by 25 bps in the quarter, due to the generation of earnings and the reduction of risk-weighted assets, related, mainly, to the NPA reduction.
Finally, the Texas ratio stood at 42.9%, an improvement of 4.7 p.p. compared to the same period in 2021.
The bank maintains a sound liquidity position, reflected in the Loan to Deposit (LtD) ratio, which stood at 79.4%, in the LCR ratio (272%) and in the NSFR of 142%.
Boost to digital subscription, with 29% of new loans
Once the technological and operational integration was completed after the merger with Liberbank, the Digital Plan contemplated in the 2022-2024 Strategic Plan has been promoted in all its lines of work. New subscription and service functionalities have been incorporated in digital banking and a new digital marketing model has been launched, based on automated platforms and artificial intelligence, and on improving the user experience.
As part of the improvement in customer service, after the integration, in-person customer service has been reinforced to guide Liberbank customers in the use of ATMs and digital banking, in an environment that is new to them.
As part of the alliance plan, progress has been made in the development of the ecosystem of services associated with homes, with the launch of the agreement with Ikea to the entire customer portfolio.
At the end of 3Q22, 60% of customers were digital and the contribution of digital channels to subscriptions continued to grow in the period, reaching 29% of new consumer loans, and more than 17% of new subscriptions in mutual funds and delegated portfolio management.
Specific actions in advice and Next Generation funding
Unicaja Banco, with the aim of channelling the Next Generation Funds, both to customers and non-customers, developed during the third quarter of 2022 actions to provide advice and funding on the Digital Kit and energy rehabilitation aid programmes.
With regard to the Digital Kit, the bank offers advice to companies and freelancers on how to get the most of this aid so that they can implement for free the best technological solutions. Likewise, Unicaja Banco’s adhesion to the ICO ‘Digital Kit Programme’ facility allows beneficiary companies to finance the amounts of solutions not covered by the Digital Kit Programme, such as the acquisition of computers and other IT equipment.
On the other hand, in its commitment to renewable energies and improving the energy efficiency of buildings, Unicaja Banco facilitates the energy transition community owners’ associations, for which it offers, together with advice on the corresponding aid, an energy rehabilitation loan that allows financing up to 100% of the renovation with a term of up to 10 years.
Developments in sustainable finance and CSR actions
Unicaja Banco has continued to develop actions of Corporate Social Responsibility (CSR) and sustainable and responsible banking throughout 3Q2022, considering sustainability as one of the axes of its 2022-2024 Strategic Plan. Some of the said actions are:
- Unicaja Banco has promoted training actions aimed at the elderly and people with disabilities after joining the strategic protocol promoted by the industry to reinforce the social and sustainable commitment of the banking industry, especially in relation to this group.
- The bank has reaffirmed its commitment to the Business Observatory for the Achievement of the 2030 Agenda (OECA), established in 2019 by the Andalusian Confederation of Business Owners (CEA) and which carries out actions to contribute to the achievement by the private sector of the UN’s Sustainable Development Goals (SDGs). For this purpose, the bank and the CEA have signed a collaboration agreement, which will allow them to continue acting to address the social, economic and environmental challenges of globalization, favouring the creation and consolidation of sustainable companies.
- The Edufinet Project, on financial education, has continued to develop its activities. Workshops were held on sustainable finance, fight against climate change, SDGs or cryptocurrencies and digital currencies.
[1] Capital ratios include net income, net of accrued dividends, computability pending approval by the European Central Bank.
Descarga aquí los gráficos asociados a la nota de prensa de resultados del tercer trimestre de 2022.
